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Uber Technologies reported worse than expected Q2 earnings with a smaller loss but on less revenue than expected. However the smaller loss was from a $1.6 billion gain from the sale of Uber’s self-driving unit. Uber’s Delivery business continues to carry the company. $UBER shares traded lower by 6.8% the miss.

Where is my Uber

Uber Technologies Inc NYSE: UBER Reported Earnings After Close Wednesday

($0.06) Beat Exp ($0.54) EPS and $2.9B Missed $3.29 Billion Forecast in Revenue

Earnings

Uber Technologies (NYSE: UBER) reported first-quarter revenue that fell short of Wall Street expectations. Uber reported an adjusted EPS loss of 6 cents, beating consensus analyst estimates of a 54-cent loss. Uber also reported $2.9 billion in revenue, missing consensus estimates of $3.29 billion. Revenue was down 11% from a year ago. Uber’s $108 million net loss in the quarter was a significant improvement from its $968 million net loss a year ago. However the bottom line benefitted from a $1.6 billion gain from the sale of Uber’s self-driving unit, and Uber’s actual operating loss on the quarter was still more than $1.5 billion.

Highlights

  • Revenue and Mobility Revenue were reduced by a $600 million accrual made for the resolution of historical claims in the UK relating to the classification of drivers.
  • Adjusted EBITDA of $(359) million improved by $95 million QoQ and by $253 million YoY.
  • Gross Bookings grew 24% year-over-year to $19.5 billion, or 22% on a constant currency basis,
  • Mobility Gross Bookings of $6.77 billionm down 38% from a year ago
  • Delivery Gross Bookings of $12.46 billion (+166%  from a year ago).
  • Monthly Active Platform Consumers (MAPCs) down 5% yr/yr to 98 mln.
  • Trips on platform were flat QoQ and 13% below Q1 2020 levels, with continued growth in Delivery trips offsetting declines in Mobility trips.

UBER Q1 2021 Earnings

Analysts Response to Earnings

Caution on Uber Regulatory Overhangs:

Wedbush analyst Daniel Ives said Uber is showing signs of significant recovery from the COVID-19 pandemic, but it is also facing regulatory overhangs. “The elephant in the room is the regulatory environment which has thrown uncertainty into the employee vs. contractor debate with the latest moves coming out of the Biden Administration, a troubling scenario/overhang for the bulls,” Ives wrote.

Morgan Stanley analyst Brian Nowak said labor regulations are “likely manageable” for Uber. “While investors are highly focused on regulation, it is also important to review 1Q results/forward trends and why we remain bullish fundamentally about this recovery asset and how we think about its scaling, cross-product [and] cash-flow generative potential into ‘22,” Nowak wrote.

D.A. Davidson analyst Tom White said Uber investors will likely continue to focus on regulation and driver supply. “Mobility's recovery continues to progress, and mgmt had some encouraging early data on Delivery segment resiliency in cities where restaurants have already re-opened,” White wrote.

Bank of America analyst Justin Post said Uber’s Mobility business is rebounding, but its Delivery business is still growing. “While there could be some concerns on Uber’s 2Q 20% mobility take outlook vs. Lyft’s higher 2Q contribution margin outlook, Uber is offering incentives to improve the consumer experience and indicated driver supply could be more balanced by 3Q,” Post wrote.

Raymond James analyst Aaron Kessler said Delivery has strong momentum, while the recovery in Mobility has been uneven. “While positive on longer-term fundamentals, we believe shares are fairly valued at current levels (6.5x 2022 EV/gross profits),” Kessler wrote.

Needham analyst Bernie McTernan said Uber’s Delivery business continues to carry the company. “We continue to be bullish on Delivery with UBER adding more verticals quickly in conjunction with mobility returning creating a compelling consumer proposition for an Uber subscription,” McTernan wrote.

Ratings And Price Targets:

  • Wedbush has an Outperform rating and $66 target.
  • Bank of America has a Buy rating and $71 target.
  • Raymond James has a Market Perform rating.
  • Needham has a Buy rating and $77 target.
  • Morgan Stanley has an Overweight rating and $62 target.
  • D.A. Davidson has a Buy rating and $70 target.
  • Deutsche Bank Maintains Buy May 2021 

Uber had been touted as the biggest and best of a group of Silicon Valley startups that had spent years raising money in private rounds at record prices, the unicorns that helped fuel the greed and delusion. Uber and Lyft, are both unprofitable and simply may never be, one may survive, both may, a new player may come a long? There are risks in these things.

A flashback to UBER's IPO:

Do Unicorns Exist?

UBER Losses For Investors Over $200 Million on Day One

IPO Losses UBER

At current prices $UBER looks to be the 5th-largest dollar loss for investors in any IPO in the past three decades.

via George Pearkes @pearkes

UBER managed to crack an unwanted top 5, the biggest losers of investors money. THis hurt the big boys and girsl but also the small investor, sucked in by the hype and delusions of a sure fire bet.  Retail investors at TD Ameritrade executed more trades in the first ten minutes of Uber’s debut than in Lyft’s first 2-1/2 hours.

Uber had already lowered its valuation expectations twice in the last two months to address investor concerns over its mounting losses.

UBER Investor Winners and Losers

Early-stage Uber investors included Benchmark, Menlo Ventures, First Round Capital and Lowercase Capital clearly made a bundle. Uber's first round of funding in 2010 was for $1.25 million at a reported valuation of $4 million. Late late-stage investors are under water at these prices.Japan’s SoftBank Group Corp invested in Uber in early 2018 at $48.77 per share, it did average down with shares at a much lower price in a large secondary transaction. The Saudi Princes and Alphabet are other major investors.

UBER Shareholders at IPO

Uber Chief Executive Dara Khosrowshahi from NYSE trading floor at the launch tried to calm investors by directing them to the company’s growth prospects and expansion plans.

“My reaction (to the share price) is if we build and build well, shareholders will be rewarded. We’re certainly not measuring our success over a day, it really is over the years,” Khosrowshahi told Reuters.

What about the Risks

It does boggle the mind of many analysts the love for UBER at lofty levels, not just from its losses but it has been a magnet for scandal. The company has been subject increased regulation in several countries which means more costs and less revenue. It is subject to strike action with it's  drivers over wages. There have controversies including revelations of a culture of sexism and bullying at Uber and U.S. Department of Justice investigations.

UBER Losses IPO

Ealier CEO Kalanick was forced to resign in 2017 by a group of investors over many of the contoversies. Uber then hired Khosrowshahi to lead the company. Uber sells it's dream as more than ride hailing, they see themselves as a “superapp” to provide logistic services, such as grocery and food delivery with "UberEats" for example, organizing freight transportation, and even financial services.

Wary market veterans, who have seen a bubble ot two just see a company that has consistently posted losses that may never be profitable.

“The business is unprofitable, new entrants can enter the market, there is potential regulatory risk, and it is very price sensitive. What is there to like about this opportunity?” Robert Johnson, professor of finance at Heider College of Business, Creighton University in Omaha, Nebraska said.

Sources: UBER SEC Filing, Reuters, TradersCommunity, Google

From The Traders Community Research Desk

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